SEC Chairman Paul Atkins says the U.S. won’t see real progress in crypto regulation until Washington stops relying on lawsuits and begins writing rules designed for digital assets. Speaking on Fox Business with Maria Bartiromo, Atkins argued that the current regulatory mess isn’t the result of uncontrollable technology, it’s the result of trying to force decades-old laws onto systems they were never meant to govern.
“Crypto Isn’t the Problem – the Rulebook Is”
Atkins noted that today’s classification standards still stem from the Howey Test, a 1946 Supreme Court decision focused on orange-grove investments. Expecting that framework to define decentralized networks, programmable assets, or tokenized value systems, he said, is both unrealistic and fundamentally unfair to developers.
According to him, the uncertainty and legal battles that crypto companies face today are a direct symptom of this mismatch. He emphasized that innovation has outpaced the paper-era concepts regulators continue to rely on, proxy rules, corporate disclosures, and standards written for physical share certificates.
A Four-Zone Model for Defining Digital Assets
Rather than lumping all tokens into a single bucket, Atkins outlined a four-category structure based on how digital assets actually function:
- Digital commodities
- Digital collectibles
- Digital tools or utilities
- Tokenized securities
Only the fourth, tokenized securities, would fall under SEC jurisdiction. Under this framework, most of today’s tokens would not be treated as securities.
Crucially, Atkins stressed that classification should evolve over time. A token that launches as a security because it raised capital could eventually lose that status as the network decentralizes and user behavior shifts toward utility rather than investment.
This approach flips the current model: instead of the SEC punishing first and clarifying later, developers would know their regulatory lane before launching a project.
Push for Broader Market Transparency
Crypto wasn’t the only reform topic he highlighted. He also pointed to two other areas he believes must be restructured:
- Limiting the influence of proxy advisory firms, which he argues distort corporate governance.
- Closing loopholes that allow U.S.-managed investment vehicles to route capital into China with insufficient oversight.
Atkins framed these issues, alongside crypto classification, as part of a larger project to modernize financial rules and increase transparency across markets.
A Shift From Enforcement Toward Definition
While Atkins didn’t specify when formal proposals may be introduced, his comments signal a meaningful shift: the SEC is beginning to discuss crypto as something that requires a defined regulatory architecture, not just enforcement actions.
Whether the U.S. finally enters a coherent regulatory era or slides back into ambiguity will depend on how quickly lawmakers and agencies move from televised discussions to binding rules.